Understanding Why My Loan Didn't Close

It can be frustrating when a real estate investor applies for a loan and thinks it’s a slam dunk to fund. However, there are many things that come into play with a loan submission.? Most of us on the lending side, can attest to the challenge of receiving all the documents we’ve asked for.? The investor is challenged with daily life and juggling work, family and other commitments.? It is very important that there is a synergy between borrower and lender to accomplish the loan submission.?

In order for the borrower to understand why some loans don’t close, let’s explore the criteria for a good loan submission.

Commercial Real Estate Loans that Close:

·???????? All requested documents are completely filled out and signed upon submission

·???????? Property is located in an area where the population is at least 75,000

a.????? Property is cash flowing or, if vacant, will have tenant commitments for occupancy

b.???? Property does not have deferred maintenance issues such as water damage, termite damage or fire damage

c.????? Ideal investment properties include Multifamily, Single Family, Industrial, Self-Storage and Student Housing

d.???? Property is NOT rural and located in a city with good infrastructure

e.????? Property Appraises at the purchase price or higher - if refinance, the property must Appraise high enough to cover the current debt plus fees

·???????? Borrower’s credit score is a minimum 680 with no bankruptcies in the past 3 years

·???????? Borrower has at least 6 months reserves:? 6 months of loan payments set aside

·???????? Borrower has experience with a minimum of 3 like properties in last 3 years (this is especially important if the borrower needs a fix/flip loan)

·???????? Borrower has not committed financial fraud or been convicted of a felony

Of course, if the real estate investor has an appetite for a hard money loan, there are exceptions to some of the above.? This requires a new set of rules in the borrower’s interest.? However, with less requirements, there will be less leverage - Loan to Value, (LTV) - and less Loan to Cost (LTC) offered on the loan. ?The rate will be higher and the fees will be higher as well.

The positive thing about hard money is the loan can usually close faster than a regular mortgage can.? To find out more about hard money loans and the requirements, visit: www.cjonescapitalgroup.com.

Knowledge is power.? My goal here was to empower the real estate investor (borrower) with the best-case scenario and requirements to fund your next deal.

As always, I can be reached at:? [email protected]? for more information, comments or questions.